The Miami real estate market is a popular investment location. (In fact, it’s one of the top 10 most searched cities in the US on Mashvisor!) One of the reasons the city is considered one of the best places to invest in real estate is that investors have options – you can buy a Miami investment property and rent it out as either an Airbnb or a traditional, long-term rental.
Many major cities have completely banned non-owner occupied Airbnb rentals, making it impossible for most real estate investors to take advantage of this profitable rental strategy in those areas. While there are Airbnb regulations in the Miami real estate market, it is still a viable option.
But which is the better option? Traditional or Airbnb Miami real estate investments?
Traditional vs Airbnb Investments in the Miami Real Estate Market
You might already have a preference when it comes to traditional vs Airbnb investments. Even so, it’s best to understand what you stand to gain from either investment in the Miami real estate market to make the best decision. Here’s a real estate market analysis for each sector.
The Traditional Rental Market in Miami
How is the real estate market in Miami doing? To understand how long-term rental properties perform in the Miami housing market, we need to look at a few key trends:
The Renter Population Is Very High in the Miami Real Estate Market
Miami is one of the larger cities in the nation in terms of population. It’s actually one of the fastest-growing cities in the US. More importantly, the renter population is very high. According to NeighborhoodScout, close to 71% of residents live in a Miami rental property. So if you’re buying property in Miami to rent out to long-term tenants, you will find that there is high demand in this sector of the rental market.
Miami’s Economy Attracts and Keeps Residents in Place
There’s a reason the Miami population continues to grow and that is largely due to the health of the economy. Miami’s economy relies on a vast range of industries including tourism, finance, media and telecommunications, international trade, and agriculture.
This diverse economy provides a stable environment for residents and Miami real estate investors as the varying industries provide many job opportunities for locals. Such opportunities keep residents from leaving the city. Thus, the tenant pool is kept large and continually increases thanks to the economy.
A Long-Term Rental Property Generates a Good Return on Investment
Mashvisor’s rental data on the Miami real estate market shows that a traditional income property can generate a good return on investment. Here are a few key stats:
- Traditional Rental Income: $2,600
- Traditional Cash on Cash Return: 1.2%
Related: What Is a Good Return on Real Estate Investment?
Using our Rental Property Finder to find top-performing Miami homes for sale, here are the results for the traditional rental strategy:
Mashvisor’s Rental Property Finder – Traditional Investment Properties for Sale in Miami
As you can see, there are plenty of high return investment properties for sale in the traditional Miami rental market as of the time of this writing.
Here is how different types of traditional rental properties perform in the Miami housing market:
Miami Single Family Homes
- Median Property Price: $598,592
- Price per Square Foot: $266
- Price to Rent Ratio: 17
- Traditional Rental Income: $2,891
- Traditional Cash on Cash Return: 2.7%
Miami Condos
- Median Property Price: $601,786
- Price per Square Foot: $423
- Price to Rent Ratio: 20
- Traditional Rental Income: $2,495
- Traditional Cash on Cash Return: 0.5%
On average, it appears the Miami condo real estate market won’t bring a real estate investor high returns. However, if you conduct your search for condos for sale with the appropriate tools, you can find high return properties. Here’s what we found with the Rental Property Finder using the filter for condos and co-ops:
Mashvisor’s Rental Property Finder – Condos and Co-ops for Sale in Miami
Miami Townhouses
- Median Property Price: $414,325
- Price per Square Foot: $225
- Price to Rent Ratio: 12
- Traditional Rental Income: $2,839
- Traditional Cash on Cash Return: 3.6%
Miami Multi Family Homes
- Median Property Price: $554,118
- Price per Square Foot: $363
- Price to Rent Ratio: 21
- Traditional Rental Income: $2,177
- Traditional Cash on Cash Return: 1.2%
Related: How to Find Multi Family Property for Sale
The Airbnb Rental Market in Miami
Should you invest in Airbnb Miami? Here are the key trends you need to know to make this call.
Note: Although COVID-19 has taken a toll on the Airbnb industry, as of this month, Miami-Dade County, home to the Miami housing market, has been given the state’s permission to reopen vacation rental properties. Be sure to check with the county’s vacation rental safety plan to ensure you abide by the rules, help to curb the spread of the coronavirus, and keep yourself and your Airbnb guests safe.
Millions Visit Miami Every Year
As mentioned earlier, tourism is one of the top industries in Miami. Millions of tourists visit the city every year. In fact, in 2018, the city welcomed a record-breaking 23.3 million tourists. Not only is Miami the Cruise Capital of the World, but it is home to many popular attractions and events including Vizcaya Museum & Gardens, Miami Seaquarium, Venetian Pool, Zoo Miami, and the Miami International Boat Show.
Because of the many events and attractions that Miami offers all year round, tourism is no longer seasonal in the city. Rather, it receives visitors throughout the year. This makes it the perfect place for buying Airbnb property.
Airbnb Is Legal in the Miami Real Estate Market, But Regulated
This is a key point to look into if you’re hoping to invest in Airbnb. As mentioned, many cities in the US have banned Airbnb and/or non-owner occupied Airbnbs from operating including top locations like Las Vegas and Los Angeles.
While this is good news for real estate investors, there are some strict Miami Airbnb laws you need to understand and abide by. Here is a brief overview of these laws but be sure to reach out to local officials to fully comprehend what is required to run an Airbnb Miami investment property legally.
- Miami vacation rentals are required to obtain a license as well as a few different types of certificates and receipts from local authorities.
- Airbnb Miami hosts will have to register with the state and pay taxes.
- Non-owner occupied Airbnbs are banned in certain zones in the Miami real estate market.
For an in-depth overview of Miami Airbnb Laws, read our Miami Real Estate Market Report.
An Airbnb Rental Property Generates a Good Return on Investment
Despite the strict regulations, Airbnb Miami income properties can still generate a good return on investment according to Mashvisor’s rental data:
- Average Airbnb Daily Rate: $241
- Airbnb Rental Income: $3,249
- Airbnb Cash on Cash Return: 1.7%
- Airbnb Occupancy Rate: 51%
Mashvisor’s Airbnb data is taken from actual Airbnb listings and verified by hosts
Here are a few top-performing Airbnbs for sale found by Mashvisor’s Rental Property Finder:
Mashvisor’s Rental Property Finder – Airbnb for Sale in Miami
Related: Is Owning an Airbnb Profitable?
Airbnb vs Renting Out in the Miami Housing Market: The Verdict
So if you plan to invest in Miami real estate, which rental strategy should you go for? It seems that either would be a good investment. Both can provide high enough rental income to generate positive cash flow. And both promise good cash on cash return.
But if we were to just look at the numbers, buying an Airbnb for sale in the Miami real estate market would result in slightly higher rental returns and more income every month. At the same time, Airbnb Miami comes with restrictions. But if you’re willing to take them on, this could be the rental strategy for you.
The Best Neighborhoods in Miami for Real Estate Investing
Because either rental strategy would be a good choice, let’s look at where to invest in real estate in Miami for both types of properties. Here are the best Miami neighborhoods according to Mashvisor’s neighborhood analysis:
The Best Neighborhoods in Miami for Traditional Investments
#1. South-West Coconut Grove
- Median Property Price: $488,018
- Price per Square Foot: $243
- Price to Rent Ratio: 11
- Traditional Rental Income: $3,568
- Traditional Cash on Cash Return: 4.4%
#2. Allapattah
- Median Property Price: $337,989
- Price per Square Foot: $204
- Price to Rent Ratio: 14
- Traditional Rental Income: $1,966
- Traditional Cash on Cash Return: 2.9%
#3. Alameda – West Flagler
- Median Property Price: $428,354
- Price per Square Foot: $270
- Price to Rent Ratio: 14
- Traditional Rental Income: $2,470
- Traditional Cash on Cash Return: 2.5%
#4. Little Haiti
- Median Property Price: $373,731
- Price per Square Foot: $229
- Price to Rent Ratio: 16
- Traditional Rental Income: $1,904
- Traditional Cash on Cash Return: 2.3%
#5. Liberty City
- Median Property Price: $296,697
- Price per Square Foot: $206
- Price to Rent Ratio: 15
- Traditional Rental Income: $1,643
- Traditional Cash on Cash Return: 2.2%
The Best Neighborhoods in Miami for Airbnb Investments
#1. Overtown
- Median Property Price: $403,967
- Price per Square Foot: $273
- Average Airbnb Daily Rate: $211
- Airbnb Rental Income: $4,367
- Airbnb Cash on Cash Return: 5.9%
- Airbnb Occupancy Rate: 55%
#2. Allapattah
- Median Property Price: $337,989
- Price per Square Foot: $204
- Average Airbnb Daily Rate: $117
- Airbnb Rental Income: $3,125
- Airbnb Cash on Cash Return: 5.9%
- Airbnb Occupancy Rate: 61%
#3. Liberty City
- Median Property Price: $296,697
- Price per Square Foot: $206
- Average Airbnb Daily Rate: $153
- Airbnb Rental Income: $2,578
- Airbnb Cash on Cash Return: 4.4%
- Airbnb Occupancy Rate: 50%
#4. South-West Coconut Grove
- Median Property Price: $488,018
- Price per Square Foot: $243
- Average Airbnb Daily Rate: $276
- Airbnb Rental Income: $4,026
- Airbnb Cash on Cash Return: 4.2%
- Airbnb Occupancy Rate: 49%
#5. North Bayfront
- Median Property Price: $451,940
- Price per Square Foot: $237
- Average Airbnb Daily Rate: $242
- Airbnb Rental Income: $3,030
- Airbnb Cash on Cash Return: 3.1%
- Airbnb Occupancy Rate: 50%
A Few Key Miami Real Estate Market Trends to Keep in Mind
Before you start your Miami property search, let’s review a few key trends you need to keep in mind, whether you go for an Airbnb or traditional investment:
- The median property price in the Miami real estate market is $600,283.
- Zillow labels Miami as a cool buyer’s market.
- The Miami real estate market predictions for appreciation show a value decline of -2.1%. This is likely due to COVID-19. Historically, Miami property values have appreciated, 188% since Q1 2000.
Ready to start searching for and analyzing properties? Sign up for a 7-day free trial now with Mashvisor. Not only will you get access to the Rental Property Finder, but you’ll be able to use tools like our famous Real Estate Heatmap and the Rental Property Calculator.